Average house prices rose by their highest level so far this year during May in a sign of buyer confidence, at least ahead of the general election, Office for National Statistics (ONS) data shows.
The latest ONS house price index shows average UK property values rose 2.2% annually in May.
It follows a 1.3% annual house price rise recorded for April 2024.
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This is the highest rate of house price inflation since March 2023 and follows several months of declines or flat growth as buyers struggled with high inflation and more expensive mortgage rates.
It appears that the falling rate of inflation in recent months and hopes of an interest rate cut have given the property market a boost.
Average house prices were also up on a monthly basis by 1.2% compared with 0.2% between March and April.
It puts the average UK house price at 285,201, which is £6,000 higher than 12 months ago.
The figures represent property sales that would have completed and been reported to the Land Registry up to two months earlier, so before the general election was even announced.
More recent house price data from Halifax and Nationwide for June shows lower levels of growth, while asking price data from Rightmove shows a larger than usual summer slowdown just before the nation went to the polls.
The ONS data is still useful though as it covers all sales, including cash buyers.
A merry May for the property market
House prices dipped earlier this year as inflation remained high and mortgage rates began ticking back up.
The May data from the ONS reflects renewed confidence among buyers as inflation began to slow. The Bank of England is now expected to bring the cost of borrowing down later this year with an interest rate cut.
All UK regions experienced annual price growth.
Average house prices in the 12 months to May 2024 increased by 2.2% in England to £302,000 and by 2.4% in Wales to £216,000.
Prices in Scotland rose 2.5% to £191,000, while Northern Ireland led the way with a 4% rise to £178,000.
Of English regions, annual house price growth was highest in Yorkshire and the Humber, increasing by 3.9%.
London was the English region with the lowest annual inflation, where prices increased by 0.2% in the 12 months to May 2024. However, they were up on a monthly basis by 3.9%.
“With the economic news flow now proving to be much more positive, this is feeding through to buyer sentiment and causing house prices to rise,” says Karen Noye, mortgage expert at Quilter.
“Given inflation is now much more under control, mortgage rates have settled somewhat too giving buyers more certainty over costs.
"This gives buyers more confidence to bid above asking prices, pushing prices up.”
Is now the time to buy a property?
It has been a buyer’s market in recent months as falling demand amid high mortgage rates meant property sellers have become realistic about the types of offer they will accept.
With the general election out of the way and Labour promising first-time buyer support and more housebuilding, the property market could be set for a busy period, even over the usually-quieter summer.
The housing market could also be boosted by lower inflation and an interest rate cut.
“High interest rates alongside ongoing cost of living pressures have put the brakes on a more significant rise in house prices up until now,” adds Noye.
“Both sellers and buyers have been reticent to make a move but under this improving picture there may be a release of pent-up demand over the next few months further buoying prices.”
Nicky Stevenson, managing director at national estate agent group Fine & Country, suggests the property market is gearing up for a summer boost, driven by May's economic rebound and stable inflation rates.
“After April's stagnant figures, this recovery marks a promising shift in the real estate landscape,” she says.
"These positive indicators could allow the Bank of England to lower the base rate this summer. This adjustment would make mortgages more affordable and accessible, opening doors for many, especially first-time buyers.”
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